We recently compiled a list titled Jim Cramer’s Latest Watchlist: 10 Stock Picks You Need to Know. In this article, we will look at where Medtronic plc (NYSE:MDT) stands among other stock picks in Jim Cramer’s latest watchlist.
In a recent episode of Mad Money, Jim Cramer advised investors to hold onto their stocks, anticipating a rebound after the market’s downturn. This advice proved useful as the Dow rose by 484 points or 1.16% and the NASDAQ also climbed by 1.16%, indicating that selling during the market decline was not the best choice.
“Last week, I advised you to hold off on selling everything and just wait, as I believed that once the pain ended, we would see a rebound. The average investor saw gains, with the Dow up 484 points, or 1.16%, and the NASDAQ also climbing 1.16%. While it might not be a full recovery, it shows that selling into Friday’s downturn wasn’t the best strategy.”
Jim Cramer noted that the previous week was tough for economically sensitive and tech stocks, despite a mixed August employment report. This report suggested a balanced economic outlook, not too strong or weak, which initially seemed favorable for those hoping for Federal Reserve rate cuts. Despite this, Wall Street reacted negatively, shifting away from cyclical stocks to more recession-proof sectors like consumer goods and pharmaceuticals, with industries such as industrials and semiconductors being particularly affected.
Cramer observed that recession-proof stocks, such as pharmaceuticals and medical devices, have performed well recently but have seen significant gains, raising concerns about a potential correction.
“Today, recession-proof stocks like pharmaceuticals, drug wholesalers, and medical devices continued to perform well, which is dangerous as these stocks have seen parabolic gains and could be due for a correction.”
He highlighted that historically, when the Federal Reserve is about to cut rates, it signals a shift in investment strategy. With the Fed expected to ease rates soon, Cramer suggests investors consider moving away from recession-proof stocks and look into more cyclical companies that could benefit from economic stimulus. While investing in cyclical stocks during a downturn is challenging, the anticipated rate cuts could make these stocks more attractive. Cramer advises maintaining diversification but being ready to adjust investment strategies based on the economic outlook.
“Historically, when the Fed is about to start cutting rates, we know that it’s time to shift focus. With the Fed leaning towards easing and an expected rate cut next week, it’s time to consider moving away from recession-proof stocks and investing in more cyclical companies. While it’s challenging to buy cyclical stocks during a slowdown, anticipating that the Fed will boost the economy can make them strong investment opportunities. It’s important to maintain diversification but be ready to adjust as needed.”
Our Methodology
This article reviews a recent episode of Jim Cramer’s Mad Money, where he talked about several stocks. From there, we picked ten companies and discussed how hedge funds are investing in them. Finally, we rank these companies from those least owned to those most owned by hedge funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Medtronic plc (NYSE:MDT)
Number of Hedge Fund Investors: 52
Jim Cramer recently analyzed the stock of Medtronic plc (NYSE:MDT) after it reached a 52-week high last Wednesday. He tested generative AI chatbots and shared his insights on the latest tech tools, emphasizing that tonight’s lightning round will feature rapid-fire stock evaluations. Cramer highlights Medtronic plc (NYSE:MDT) as a strong choice in the medical device sector. He notes that Medtronic plc (NYSE:MDT), which produces devices for cardiovascular, neurological, surgical, and diabetes management, has shown impressive performance.
“After the stock hit a 52-week high last Wednesday, I’m seeing what’s on the horizon with the company. I decided to put generative AI chatbots to the test. Do not miss the fast-moving head-to-head results and how I’m scoring some of the newest tools in tech. It’s a hoot, and all your calls are rapid-fire tonight’s lightning round. So stay with us.
What do we do with the stock of Medtronic plc (NYSE:MDT), the heavy hitter in the med device space? Now that the stock has finally gotten some real lift, Medtronic plc (NYSE:MDT) is a fantastic way to play the healthcare utilization bull market. They make all sorts of devices for cardiovascular disease, neuroscience, surgery, and diabetes management. When these guys reported near the end of August, they delivered an incredible quarter. Since then, we’ve seen a rotation in healthcare. Medtronic plc (NYSE:MDT)’s stock has risen more than 6%.”
In Q1 FY2025, Medtronic plc (NYSE:MDT) reported earnings per share of $1.23, slightly surpassing expectations, and revenue of $7.97 billion, which is a 3.4% increase from the previous year. This growth is driven by rising demand for medical devices, especially in the cardiac and neurovascular areas. Medtronic plc (NYSE:MDT) has also updated its earnings guidance for FY2025, predicting an EPS between $5.42 and $5.50 and revenue between $33.5 billion and $33.8 billion.
Medtronic plc (NYSE:MDT) is investing in key growth areas like robotics, AI-driven surgical systems, and diabetes care, supported by a strong R&D pipeline and strategic acquisitions. Its healthy balance sheet, with a debt-to-equity ratio of 0.55 and a dividend yield of about 3.2%, reinforces its ability to return value to shareholders. Given its diverse product range, ongoing innovations, and steady financial results, Medtronic plc (NYSE:MDT) is well-positioned to meet the growing global demand for medical technologies, making it a compelling choice for long-term investors.
Carillon Eagle Growth & Income Fund stated the following regarding Medtronic plc (NYSE:MDT) in its Q2 2024 investor letter:
“Medtronic plc’s (NYSE:MDT) fundamental updates in the second quarter were mostly positive, including issuing solid quarterly results and reporting positive results from two cardiology clinical trials. However, there is some investor apprehension around the implied cadence of guidance for fiscal 2025, which was exacerbated by the recent departure of the company’s CFO for a role in another industry.”
Overall MDT ranks 5th on our list. While we acknowledge the potential of MDT, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.